Transposable elements (TEs) account for 45 percent of the human genome and over 50 percent of the genomes of most plants. Despite being one of the major sources of genetic diversity in eukaryotes, little is known about the mechanisms underlying their success. This study focuses on miniature inverted repeat transposable elements (MITEs), a large and diverse group that is the most relevant TE associated with the genes of flowering plants, especially the cereals. MITEs are also a significant component of animal genomes including insects, zebrafish and humans. Attempts to classify MITEs with respect to existing transposons were hampered by the fact that MITEs are nonautonomous DNA elements with no coding capacity and no actively transposing families. Results from the last funding period led to the classification of most MITEs into Tourist-like and Stowaway-like, while genetic and genomic approaches identified two large transposase (TPase) families, mariner-like and PIF/Harbinger, as the TPases responsible for their origin and spread. Finally, a computational approach led to the isolation of the first actively transposing MITE. This proposal focuses on the MITEs and their TPases in rice where MITEs are the most prevalent TE and where there are active MITEs. The availability of two draft sequences facilitated the identification of over 100,000 Tourist and Stowaway MITEs and over 120 TPases belonging to three families. A model to account for the origin and amplification of MITEs has been proposed and will be tested by (1) isolating active TPase candidates via computer analysis of the two draft rice genomes. Several are already available. (2) Developing assays to test candidates for DNA binding and transposition characteristics. The assays proposed include yeast 1 and 2 hybrids, a yeast excision and transposition system and transient plant transformation. Since these assays do not require purified TPase, libraries of variant TPase and DNA binding sites will be tested. (3) Active TPases will be purified and functional domains identified, and (4) Active TPases and their associated MITEs will be transformed into rice to analyze TPase-MITE interactions in a natural host. In addition to being in an epoch of remarkable TE activity, the cereals, including rice, are also the primary source of human calories. As such, knowledge of TE-mediated mechanisms of diversification are intimately involved in improving human health and understanding how plant and animal genomes evolve.